I am an entrepreneur inside and out. Five years ago, if someone had told me that I would be working for a venture capital company in the future I would have told them to get out of town.
I love to build products, build communities, and build companies – particularly the kind that have real, measurable impact on improving lives. Wilhelm von Humboldt, one of the chief architects of the modern education system, wrote, “There is only one summit in life: to have taken the measure in feeling of everything human.” Grassroots impact entrepreneurs understand this.
In my mind five years ago, so-called “vulture” capitalists distorted markets, hyped up valuations, and pushed management of companies into decisions that took them in a direction far from the organic and healthy growth of a business.
This was, of course, prior to me taking any venture capital investment. I was forced to swallow my own words when my company took angel investment, which led to VC. This is the inevitable treadmill of fundraising.
Academia, investors, government, bankers, big corporates, consultants, and entrepreneurs. We all feed and need each other.
When I exited my last business, my VCs offered me the opportunity to become a Venture Partner while I worked out my next steps. I was surprised, flattered, and disturbed at the same time. Was I moving to the “dark side”? I told myself that this was a period of change for me, and perhaps I could learn lessons from this experience that would help me in whatever I chose to do next.
Fast forward 18 months. In 2017 I started a new business called Iris Speaks (on a mission to digitize the delivery of speech and language therapy), but I continued to do some Venture Partner work on the side.
Why? Because it has actually turned out to be very beneficial. This is what I have learned and how it has changed my perspective on investment:
1. We all need each other.
Academia, investors, government, bankers, big corporates, consultants, and entrepreneurs. We all feed and need each other. Understanding this basic principle, particularly in the social impact world, is the base upon which to build. There’s no clear line between good and bad.
2. Sturdy connections matter.
Building connections across this ecosystem will give you a more secure footing as an entrepreneur. Some doors that were closed to me as the begging-to-get-a-meeting entrepreneur have opened to me as a “vulture VC.” I like this – it makes life much easier, as we need to open so many closed doors.
3. Chase the right kind of money.
There are some business models and impact areas that are not appropriate for venture capital. The speed and scale of returns will put too much pressure on the business and could actually have a negative effect on the impact.
There are some business models and impact areas that are not appropriate for venture capital.
Alternative funding options such as angels, venture philanthropy, debt, and grants may be more suitable for different stages of growth. I have learned to identify this and chase the right kind of money. Build something sustainable.
4. Get high on vision.
Venture capital exposes you to some very big, bold, high-impact businesses. “Think big, be bold, find a global issue to solve, watch the cash flow carefully, test, iterate, test again, find that point when it’s right to scale, think global” are all ideas that constantly float around this environment. My vision now soars in ways it never did before. I am no longer afraid of tall poppy syndrome. None of us should be afraid to tackle big ideas because of naysayers. I’ve learned to build my own support base for all the ups and downs.
5. Respect each other.
As an investor, don’t waste an entrepreneur’s time. Universally, we all agree that fundraising is the most time consuming, stressful, and potentially damaging activity that we do as founders. For us investors, it’s important to filter carefully and keep the meetings short and structured. As a reminder to entrepreneurs – it is a long-term relationship. This means don’t come to the VCs when you only have three months to raise. We have a very strong desperation radar!
6. Things change.
Where you start is not where the business might be in three years. Investors know this, and we look for adaptability in entrepreneurs and acknowledgement of areas to improve. We will look for holes in your business, so don’t hide them. Acknowledge what you need to work on, and explain how you will fix these problems. There is no perfect deal, but we all need to manage the down side.
Entrepreneurs – we can, and will, change the world for the better. And we can change it more quickly, and with more impact, with the right investors and supporters around us. In most cases, the “dark side” of VC is not actually that dark, and we entrepreneurs can learn a lot by slipping into their skin.